U.S. markets and stock exchange traded funds rallied Tuesday after a record jump in May retail sales helped fuel optimism that the reopening economy may recover more swiftly with cooped up consumers going out again.
On Tuesday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 1.8%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gained 2.2%, and SPDR S&P 500 ETF (NYSEArca: SPY) rose 2.0%.
According to the Commerce Department, overall retail receipts surged 17.7% last month as Americans resumed spending once lockdown measures were lifted, but the May rebound only made up a fraction of the historic falloff over March and April, Reuters reports.
“It’s a blowout number,” Sebastien Galy, a macro strategist at Nordea Asset Management, told the Wall Street Journal. “This is a very sharp rebound and is very encouraging for the U.S. and the global economy as a whole. While we still might not see a V-shaped recovery, we’re certainly moving away from a U-shaped one.”
“We’re continuing to see better-than-expected economic data fuel this bull rally,” Sam Stovall, chief investment strategist at CFRA Research, told Reuters.
Further fueling the market optimism in hopes of containing the COVID-19 pandemic, U.K.-led drug trials revealed that low doses of a generic steroid drug dexamethasone to patients with COVID-19 reduced death rates by around a third among severe cases.
Additionally, U.S. markets found support from the Federal Reserve as policymakers begin buying corporate bonds to add liquidity and an overnight report that hinted the Trump administration is proposing a $1 trillion infrastructure project.
Federal Reserve Chairman Jerome Powell said in testimony to the Senate Banking Committee Tuesday that the economy still faces significant long-term risks from high unemployment. He does not see a full recovery “until the public is confident that the disease is contained.”
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